The (Fast) Changing Landscape Of The Malaysian Digital Economy

SIX years may seem like a long time but it is a blink of the eye when you consider the massive transformation in the digital landscape. Malaysia’s digital economy is not trapped in a bubble but is growing and expanding to such an extent that we may not even recognise it in another five years.

Just as the Malaysia of today, from a digital point of view, is almost unrecognisable from the one Sajith Sivanandan (pic, below), managing director of Google Malaysia, Vietnam, Philippines and New Emerging Markets arrived to, six years ago. It was a completely different world then versus today, Sajith feels. The Google chief needs to look no further than how the adoption of ride hailing apps has increased the mobility of his own family, with the better customer experience and security offered by the likes of Grab and Uber.

Beyond the ride hailing apps, the increasing pervasiveness of digital with its manifestations through greater ease in shopping, making payments, banking etc. have just resulted in, “our quality of life changing overnight” says Sajith.

Mobile big part of change wave

A big part of this change comes from the way mobile devices have altered the landscape, changing the way we communicate, obtain news and shop.

Although PCs are frequently used to shop online, smartphones are becoming the device of choice for online shopping. The recent iPay88 e-commerce outlook was but the latest confirmation of this strong mobile led trend.

In Malaysia, smartphone penetration was in the single digits a few years ago but it has since rapidly increased, rising from 51% in 2014 to 70% in 2015 and 80% in 2016, leading Sajith to declare, “the impact of this has been nothing short of seismic”.

Nielsen Malaysia agrees. “There is no doubt that mobile devices and smartphones are changing the way we operate on a daily basis and one of the key changes in progress is how we pay for items, not just online but in our daily face-to-face transaction.” said Richard Hall (pic, right), Country Manager of Nielsen Malaysia.

To be sure, e-commerce is but one indicator of a society transitioning from a physical to a digital world. But the rising rate of e-commerce has a larger ripple impact as once a person becomes comfortable buying goods online, it is inevitable that they will start purchasing services as well.

Being connected online means that people want convenience at their fingertips and lays the foundation for a booming online ecosystem with more consumers confident enough to make various other online purchases.

Lazada Group chief executive officer Maximilian Bittner notes that the high smartphone adoption rate in Malaysia has resulted in a shift in Lazada’s customers shopping more on their mobiles instead of the desktop.

Compared to two years ago where 50% of transactions were performed on Lazada’s mobile app, today, that has risen to 70%. Inevitably Lazada revamped its mobile app in early 2016 to offer shoppers a better experience.

“Everyone is building their business around e-commerce and digital. Banks have their financing solutions, telcos have communications ones,” adds Hans-Peter Ressel, Lazada Malaysia CEO.

Indeed, according to Nielsen’s Mobile Shopping, Banking & Payment Report in 2015, one-third of Malaysians say they have purchased a product or service in the past six months by using a mobile app.

Other data points from the report reveal the following:

Malaysians spend on average over 200 minutes a day on their mobile devices.

They now spend six minutes a day on calls as compared to 12-14 minutes a day in 2013.

Many spend about 60 minutes on average, on chat apps like WhatsApp, WeChat and Line as their main form of communication.

Living in the micro-moment

Because of this constant digital connection, Malaysians experience something Google calls micro-moments. These are intent-driven times when people reflexively turn towards their device to learn, discover, watch and buy something.

Breaking it down by the numbers, Malaysians most often use their mobile devices to look up product information (64%), compare prices (60%) and search for coupons or deals (51%).

We used to have to type our query into the search bar in our browser to find out about something but now information is at the touch of a button and we can ask Google with the sound of our voice.

“What has happened is that we are now “Generation Informed,” explains Sajith. “You could argue that we are over informed. Look at what is happening on YouTube. Sixty-five percent of views on Youtube come from a mobile device. In 2011, that number was in the single digits.”

Nielsen’s report confirms that users have grown savvier as six in 10 Malaysians view the Internet as a means of checking out products to inform their offline purchases.

Looking at the numbers, he said YouTube’s growth has doubled in Malaysia this year compared to last year. The fact that Malaysians spend an average of 40 minutes watching YouTube in a day shows that it is by far the biggest channel with the widest reach among the adult demographic.

With people living their lives online, businesses need to take a digital first attitude to capitalise on micro-moments.

Context matters

Recalling his experience working for StarTV in India back in the mid-1990s, when prime time news and coverage by widely circulated newspapers was enough to reach a target demographic, things have changed.

“Now context matters the most in addressing a user’s micro-moments,” says Sajith, sharing an example of how context matters in marketing, “At 6pm, Pizza Hut can serve an advertisement to hungry commuters, enticing them to a hot pizza waiting for them when they reach home. That’s very powerful messaging.”

Sajith adds that context matters not just in urban centres but in smaller towns and villages as they are all coming online thanks to the proliferation of smartphones.

Adding to that is the Budget 2017 announcement that within the next two years fixed-line broadband speeds are set to double while having prices slashed in half.

“When this starts to happen, we would have reached an inflexion point as more businesses, especially small-medium enterprises (SMEs) will undergo a transformative change,” predicts Sajith.

“Businesses are just a lot more efficient now. The cycle between consumers realising what they want and need is getting a lot shorter. It certainly has gotten more efficient since I arrived in Malaysia in 2011,” explained Sajith of the efficiencies gained thanks to the maturity of the digital economy.

Widening the talent pool

There are no old businesses anymore, all there is are just “old ways of thinking”, declares Sajith. Indeed, the digital economy has reshaped the way businesses think as they all have to think from a digital perspective first.

However, Sajith notes that one impediment to the growth of the digital economy is the lack of ready talent.

“I believe matters like infrastructure are addressable in the short run and it is just a matter of policy but it takes time to develop and nurture talent,” he said.

Google said it is helping drive more talent into the digital ecosystem with programmes like Ignite that provide a springboard for young talent to move into a digital marketing career by providing Google AdWords certification and chances at internships.

“We help train university students and prepare them for the working world, getting them certified and ready to advice businesses when they enter the job market. Last year we had 600 students certified and this year that number has increased by more than three times to 2,000 students,” he said.

Lazada too is offering a helping hand to young entrepreneurs by providing online and offline classes through its Lazada University, teaching everything from selling basics to how to run a store on Lazada. The best part is that these online courses are free.

But it is not just new entrants into the workforce who need to be digitally ready. The reality is that even senior level executives and those in the C-suite must understand what their customers are thinking online and what micro-moments mean.

“What is critical now is that all Malaysian companies really look into how to make their entire organisation digitally ready. I certainly hope this can happen in the next 12 to 18 months,” says Sajith.

Dealing with the connected mind of the Millenials

And if traditional businesses don’t have enough on their hands with slowing consumer spending, they also now need to understand the impact of new consumer behaviour such as showrooming and consumers crowd sourcing for information.

Nielsen’s executive director for consumer insights Monjur Elahi (pic, right) noted that research has shown that millennials don’t just blindly trust word of mouth anymore. “They will read through blogs, reviews, online articles and news before asking their friends for opinions.”

He also notes that it is more common for Malaysian consumers to engage in showrooming, the practice of checking prices online and inspecting items in physical stores and visiting physical stores. They then leverage on this knowledge and demand for discounts that they see online.

Consumers also now have, what Monjur calls “a connected mind”. “They are combining their wisdom. So if you want to buy something, you would normally consult your network and the size of that network will define how smart you are as a consumer,” he explains.

Truly, the rise of the digital economy has created a new set of challenges for businesses in Malaysia to deal with

Source from https://www.digitalnewsasia.com/pulse-deep-dive/fast-changing-landscape-malaysian-digital-economy